Securities Scams Still Bilk Public
Porter, Sylvia, THE JOURNAL RECORD
A quarter of this illicit activity is conducted over the phone, according to John C. Baldwin, director of the Utah Division of Securities and president of the North American Securities Administrators Association, an organization of securities regulators from across the nation.
One of the largest tragedies is that securities frauds target the elderly. Con artists have discovered that retirees are often easy marks because older citizens are concerned that their retirement nest egg may not be sufficient to provide the comfort and care they need.
A popular scam is to get them to tap their home equity for some bogus or highly doubtful offering, based on the promise of enormous returns which are never realized.
Among the most popular stock frauds in 1989 are:
- High-risk penny stock schemes.
- Bogus oil and gas well investments.
- Overpriced art, coin and gem investments.
- ``Dirt pile'' swindles
The ``dirt pile'' scam has been growing in popularity because it sounds foolproof to many investors. It works like this:
You are offered an opportunity to invest in a certain amount of ``unrefined'' gold ore. The ``ore '' is guaranteed to contain a specified amount of gold, yet you purchase it at far below the price of gold. Then you wait for your riches to pour in, which they never do.
That's because the gold is spread through the ``ore'' in quantities too small to recover. True, the pile of dirt you purchased does contain gold - but there's no way to extract it. The dirt pile (usually tailings from mines) is worthless.
To give you some perspective: Even seawater contains amounts of gold. But the only way to extract it involves processes that cost many times the market value of the precious metal.
``Dirt pile'' and other investment frauds are most frequently conducted by telephone.
``One of the main factors behind the overall surge in investment fraud is the steadily increasing use of the telephone as the `weapon' which con artists and swindlers use to hold up their victims,'' Baldwin explains. …